Social partners sign new CoLA agreement

Trade unions and employers have finally managed to reach a transitional agreement over the Cost of Living Allowance (CoLA), after both sides accepted a compromise proposal by Labour Minister Yiannis Panayiotou.

The agreement stipulates that the CoLA will now be 66.7% of the previous year’s inflation, up from the previous 50%.

The increased CoLA rate will apply as of June, while the social partners have committed to begin a dialogue aiming at “a comprehensive and permanent agreement by June 2025”.

Representatives of both trade unions and employers praised the Ministry’s mediation efforts and stated that the agreement safeguards labour peace allowing for the discussion of the other issues facing the labour market in Cyprus.

“This success belongs to all as we strived together, and together we were able to conclude and agree,” Panayiotou said after the agreement was signed at the Labour Ministry, in Nicosia.

He also thanked the social partners for their constructive stance and evaluating the situation “rationally and responsibly”.

President Nikos Christodoulides welcomed the news, thanking the social partners for their responsible stance, as well as the Minister of Labour.

“You can understand how important labour peace is in our country and especially at the present juncture,” he said when asked to comment. “There are many other labour issues that we will focus on in the coming period, within the context of our people-centred approach.”

Cyprus froze CoLA during the 2013 economic crisis and a 2017 transitional agreement stipulated that CoLA would be given once a year, on the condition that the economy shows growth in the second and third quarters of the previous year. Under the agreement, the CoLA indexation would be incorporated into basic salaries at 50% of the annual increase in the Consumer Price Index. The agreement was extended until the end of 2021. Before the 2013 crisis, CoLA was calculated every six months.

In 2022, inflation in Cyprus peaked at 8.4% mainly driven by the increased international oil prices due to the war in Ukraine.